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David Lerner Associates: Five Things You Should Share With Your Investment Advisor

There is a wide range of different types of information that investors should share with their investment advisor. David Lerner Associates Executive Vice President Martin Walcoe identifies five things in particular:

1. Investment objectives— Successful investing starts with setting realistic and measurable goals and objectives. “Without them, you’ll have no way of knowing whether you’ve achieved success or not,” says Walcoe.

Investing goals can be broken into two main categories: short-term goals and long-term goals. Short-term goals might be things like buying a car, going on vacation or saving enough money to establish a liquid emergency fund. Long-term goals for most people usually include saving and investing for retirement and their children’s college educations.

2. Investment time horizon— In other words, when will you need to access the money that is being invested? Money that may be needed in the short term (such as within two to three years) should usually be placed in highly liquid investments like bank savings and money market accounts.

For money that will be used for longer-term purposes like retirement or college educations, Walcoe says you might consider investments like mutual funds or bonds. “With a long-term time horizon, it’s easier to ride out the potential short-term volatility of these investments, since you’ll have more time to make up for potential short-term losses.”

3. Risk tolerance— “Every investor’s level of risk tolerance is a little bit different, so this is something that’s very important to share with your investment advisor,” says Walcoe. Doing so will make it easier for your advisor to recommend investments that strike the right balance between your return objectives and your tolerance for risk of the loss of principal.

4. Liquidity needs— This goes back to your investment time horizon. If you know that you will need access to your money on a certain date (in the short term) for a specific reason, your advisor should generally recommend investments that are easy to liquidate without penalty or tax consequences. But if you are not likely to need the money in the near term, your advisor may recommend more illiquid investments like non-traded REITs or mutual funds.

5. Other investments— “It’s important that your investment advisor be made aware of all of your investments, including those that may be held at another brokerage,” says Walcoe. “This will give your advisor a holistic view of your entire financial picture, which will better enable him or her to make recommendations that fit within your overall investment plan.”

This is by no means a comprehensive list of all the information you should share with your investment advisor. Other important things may include your age, tax status, investment experience, financial situation and needs, and any other information you may choose to disclose.

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by
David Lerner Associates,Inc. (DLA). This material does not constitute an offer or recommendation to buy or sell securities and should not be considering in connection with the purchase or sale of securities. Member FINRA & SIPC.

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